Gauhati High Court Stays GST Notice To Pepsico Citing Procedural Lapses

In a recent case involving Pepsico India Holdings Pvt., the Gauhati High Court has issued a stay on the GST Show Cause Notice served to the company. Pepsico had argued that the procedural requirements as per the Central Goods and Services Tax Act, 2017, were not followed.

The notice pertained to an alleged Input Tax Credit discrepancy for fiscal 2018. The company argued that the Proper Officer did not have jurisdiction to issue the notice, without following these mandatory conditions.

Authorities claimed that the company incorrectly claimed ITC amounting to Rs 19.51 crore for FY18, including specific amounts for CGST, SGST, IGST, and Cess. The notice also mentioned the imposition of interest, as per the CGST Act, on the ITC wrongly availed.

The tax authorities proposed to levy a penalty, as per the CGST Act, for the wrongful availing and utilisation of ITC, in conjunction with the corresponding sections of the Assam SGST Act, 2017, and Section 20 of the IGST Act, 2017.

The company, however, contended that certain statutory requirements, including the issuance of notice in Form GST ASMT-10, were not adhered to before the issuance of the Demand-cum-Show Cause Notice.

Notably, GST ASMT-10 is a notice sent by tax authorities to a registered taxpayer, when they find mistakes or inconsistencies in the taxpayer's GST returns. It's like a notification to let the taxpayer know about these issues and to ask for an explanation or correction of the errors.

The court, in its prima facie assessment, supported the petitioner's contentions, finding that the issuance of the impugned Demand-cum-Show Cause Notice on Sept. 5, was without compliance with the mandatory conditions stipulated in the CGST Act, 2017, and the CGST Rules, 2017.

Consequently, the court ordered a stay on the operation of the demand notice until further proceedings, emphasising the need for adherence to statutory procedures.